Overview of the Income-Tax Bill, 2025

The Union Finance Minister introduced the Income-Tax Bill, 2025 in Parliament to replace the existing Income-Tax Act of 1961. The primary aim is to simplify the law for both taxpayers and administrators by reducing litigation and creating a more predictable tax environment. However, the proposed changes may not significantly alter the complexities present in the current legislation.

Key Objectives and Criticisms

• The Bill aims to make the law more accessible and transparent by using plain language.
• Despite these objectives, the Bill uses dense language that continues to perplex common taxpayers.
• Structural changes, such as the replacement of “notwithstanding” with “irrespective,” are seen as cosmetic and offer little practical simplification.

Legislative and Structural Changes

• The Bill intends to remove outdated redundancies and consolidate compliance requirements.
• Definitions are made crisper, and timelines are shifted to tables and schedules, yet the inherently litigious nature of the law remains.
• Existing clauses from the old law, such as the definition of "income," are incorporated by reference, questioning the efficacy of the overhaul.

Implications for Legal Interpretation and Litigation

• Changes in the Bill could reopen settled legal debates, resulting in more litigation.
• The power of income-tax authorities to reopen completed assessments remains contentious, with the Bill doing little to clarify or improve current practices.

Expansion of Search and Seizure Powers

• The Bill extends the power of search and seizure into digital domains, allowing officials to inspect electronic data and override access codes.
• The expanded powers raise privacy concerns, especially considering the Supreme Court's recognition of the fundamental right to privacy.
• There is an absence of judicial oversight for these powers, which could lead to potential misuse.

Conclusion and Recommendations

The Bill should perhaps be revisited by the Lok Sabha's Select Committee. Instead of a complete repeal and reenactment, focus could be on tidying the current law and eliminating its more draconian aspects.